FS Fund Advisor LLC

ITEM 5: Fees and Compensation

As compensation for the performance of its obligations as the manager of the Fund, the Adviser
will generally be entitled to receive from the Fund, subject to the terms and conditions of each
Fund’s governing documents, the management fees (collectively, the “Management Fees”).
The Management Fees are typically paid by the Fund quarterly in arrears, in accordance with its
governing documents. All Management Fees are billed and payable as described in each Fund’s
governing documents. The Adviser may, in its sole discretion, waive, reimburse, or delay all or
part of such fees.

Generally, the Fund (and, indirectly, the investors therein) bears all expenses as defined in the
governing documents and investment management agreement of each Fund, including: (i) legal,
filing, auditing, consulting, administration, accounting and other professional fees and expenses;
(ii) expenses associated with periodic reporting; (iii) expenses associated with financial statements
and tax returns; (iv) insurance, interest and other expenses incurred in respect of borrowings, if
any; (v) other expenses associated with the acquisition, holding, monitoring, settlement and
disposition of the Fund’s investments (including, without limitation, any brokerage, transaction,
custody or hedging costs); (vi) the costs and expenses of any custodians, lenders, investment banks
and other financing sources; (vii) any indemnity expenses; (viii) the costs and expenses of any
litigation involving the Fund or its investments; and (ix) certain compliance related costs and
expenses.

For a more complete discussion of each Fund’s fees, compensation, and other expenses, please
refer to the governing and offering documents for each Fund and Item 12: Brokerage Practices.

As the Adviser establishes other relationships (such as, with additional Clients), it may arrange to
receive different types of fees, including fixed fees or fees paid on some other negotiated basis.

ITEM 7: Types of Clients

The Adviser currently provides investment advice to the Fund organized under the Company Act
and may, in the future, provide investment advice to other investment vehicles. As discussed in
Item 4, the Adviser may, subject to any limitations described in the investment advisory agreement
between the Adviser and the Fund, advise other Clients.

The required minimum investment in the Fund varies. Lesser amounts may be accepted in certain
limited circumstances based on the discretion of the Fund. Please consult the applicable offering
documents for the Fund for further details.